Income Tax (Charge)

Nick Timothy Excerpts

Monday 4th November 2024 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I would like to place on the record my congratulations to my hon. Friends the Members for North Somerset (Sadik Al-Hassan), for Wrexham (Andrew Ranger) and for Huddersfield (Harpreet Uppal) on their amazing maiden speeches today.

I listened on Wednesday to the contribution from the hon. Member for West Worcestershire (Dame Harriett Baldwin)—I notified her that I was going to quote her speech—who said that this was

“a Budget of the public sector, by the public sector, for the public sector.”—[Official Report, 30 October 2024; Vol. 755, c. 854.]

She said that as though it were a bad thing. I urge the Government to reject the false dichotomy being set up by the Conservative party, in which investment in the public sector is somehow a drain on the national expenditure, and putting money into our public services is somehow inherently bad for our society and our state.

When I speak to businesses, yes, they raise with me their concerns about national insurance increases— I think businesses have done so with every Member across this House, and it would be foolish to suggest otherwise—but they also ask me questions like, “Can you fix the A50 so we can expand and get more things moving down from JCB?” and “Can you get some proper mental health support so we can get workers back to work quicker when they are struggling with their mental health?” They tell me that they struggle with the supply of skilled young people and are asking desperately for investment in skills to make sure that there is a ready pipeline of young people who can do those jobs. It is therefore completely fatuous to suggest that the investment that this Government are putting into the public sector will be in some way detrimental to the growth of our economy and the success of our private industry.

[Nick Timothy (West Suffolk) (Con)]

Will the hon. Gentleman give way?

[Gareth Snell]

No, there is no time—I am terribly sorry.

I say this as one of those pesky trade unionists the Conservative party seems in such opposition to: when the Conservatives talk about the significant pay for trade unions, first of all, it is not for the trade unions, but for the members of those trade unions, all of whom are working people. Most of them live in Conservative Members’ constituencies, and some of them may have even voted for them—sadly, not all trade unionists vote Labour. However, their pay goes into their pockets, and from there it goes on to their high streets and the shops in their communities. It is not hoarded away as offshore wealth. It is not put into some clever accountancy scheme. It is used to buy kids’ school shoes. It is used to buy Saturday morning breakfast in the local café. It goes back into the economy in a way the Conservatives simply seem to misunderstand.

In the short time I have remaining, I say to the Government: please do not listen to the siren voices that suggest that the investment we are putting in is bad for our economy. It is not. It is good for our state, it is good for our country and it is good for our economy.

--- Later in debate ---

[Nick Timothy (West Suffolk) (Con)]

What a relief, Madam Deputy Speaker—thank you.

Before the election, Labour promised to increase taxes by £8.5 billion, spending by £9.5 billion and borrowing by £3.5 billion, but last week it raised taxes by £40 billion, spending by £76 billion and borrowing by £36 billion. There is no mandate whatever for this Budget. I agree with one claim made by the Chancellor: our economy does need investment to grow. The pity is that her Budget will fail to do it.

The Red Book says that the capital budget for the Department for Transport will be cut by 3.1% by 2025-26. The Chancellor says that she wants to crowd in private investment, but the OBR says that her Budget crowds it out. We know that much of the public investment will be wasted on the Energy Secretary’s schemes. The Chancellor is giving him borrowed billions to guarantee returns to investors for technologies that the market does not back. Because the Chancellor has changed the accounting rules—something that in opposition she said she would not do—we know that the cost of failed investments will be hidden and they will be presented as assets with fictional value.

This is where the Chancellor is leading us into dangerous territory. She has already made Government borrowing more expensive, and the bond markets are trickier than they were. British pension funds now own only about a quarter of outstanding gilts. Demand is falling as defined-benefit schemes have closed and existing schemes mature. The value of gilts needing to be sold each year is about £140 billion, which is 5% of GDP, and gilt yields have risen since the Budget. Even if interest rates are cut this week, they will stay higher for longer because of her decisions.

And for what? The Chancellor admits that growth in GDP per capita will average only 1.2% a year for the rest of the decade. She is taxing family farms. She is taxing businesses and GPs. She is taxing jobs, and businesses are already planning to reduce headcount. We know she will be back for more, because she will not cut departmental budgets as she forecasts from 2026-27.

We know that the priority is not growth. If it were, the Chancellor would not have announced such a relentlessly anti-business Budget. Instead, the priority is Labour’s own vested interests, because if public sector productivity is the goal, why hose money at the unions without linking pay to reform and why make it easier to strike? Where is the supply-side plan to reduce the cost of building infrastructure? There is no sign that the Government want to strip back the layers of regulation, when its beneficiaries are Labour-supporting vested interests such as environmental and administrative lawyers.

This Budget does not fail because of its dishonesty and absence of mandate, but because it fails in its own terms. It taxes and borrows and spends, and its own small print says that it will fail to improve growth, wages, public services and the public finances.